OLYMPIC SPIRIT
From the February 1998 Issue of CardTrak
VISA is going for the gold as it seeks to maximize its status as an official sponsor and official credit card of the Nagano Olympic Games. This month VISA launched a nationwide promotion with the U.S. Postal Service offering customers a set of four Olympic postcards for using a VISA credit or debit card for postal purchases. Some VISA issuers are jumping on the bandwagon too. Cardholders of the PNC Bank/Mall VIP Visa Card will receive a commemorative VISA Olympic pin for VISA purchases of $25 or more at Simon DeBartolo's 131 shopping malls nationwide. Also, First USA unveiled its Platinum VISA Nagano 1998 Collection credit cards. The collection features thirteen varieties of commemorative limited edition designs, some of which celebrate past U.S. golden Olympic moments. Upon activation, cardholders receive two Olympic collectibles: a baseball cap and a lapel pin. First USA is offering a 4.9% five-month introductory rate followed by a 12.99% fixed A.P.R. thereafter. Applications are available online via First USA's website or via cardweb.com.

Foreign travelers to the Olympics may be in for a surprise whenever they try to use an ATM card in a Japanese ATM machine.

Of the 130,000 ATMs throughout Japan, only 700 accept international cards and just a handful of those are located in the Nagano metro area. The Japanese ATM system utilizes an invisible magnetic stripe on the front of the card instead of the standard, visible magnetic stripe on the back of the card. To help the situation VISA announced it has placed 17 international ATMs on and off the venues at the 1998 Olympic Winter Games in Nagano, Japan. VISA says twelve of the seventeen international ATMs are located in Olympic Games' venues, and since VISA is the exclusive payment system for the Winter Games, the venue ATMs will only accept VISA cards. Proprietary ATM cards and even those with the PLUS mark will not work in the venue ATMs.

VALENTINE SPIRIT

While VISA has the Olympics sewed up, MasterCard is cashing in on the Valentine's Day spirit with a new promotion. MasterCard debit cards or MasterMoney cardholders can save 25% off long- stemmed roses or $10 off a floral arrangement. The Valentine's Day promotion is a partnership between MasterCard and Flowers USA. There is no minimum purchase and cardholders in all fifty states are qualified.

PLATINUM RUSH

The number of platinum VISA and MasterCards is now approaching 15 million nationwide representing a ten-fold increase from eighteen months ago. The platinum war has escalated to the point where at least one card issuer now has a titanium card in testing. According to statistics compiled by CardTrak the go-to interest rate is averaging 14.83% for platinum cards while the most commonly offered intro rate is 5.9%. Overall bank credit card rates, on a weighted basis, are averaging slightly above 18%. MBNA and First USA have also selectively offered introductory rates of 3.9% and 4.9%. People's Bank is offering the lowest go-to platinum card interest rate of 11.9%

Whose actively playing the platinum game? Advanta AT&T Universal Bank of America Banc One Capital One Chase Manhattan Citibank First Bank First Chicago First USA MBNA America NationsBank People's Providian Wells Fargo

CARD SHARKS

The Federal Trade Commission said this month that 'Operation Loan Shark' has snagged a total of 37 telemarketing firms engaged in fraudulent advance loan schemes including advance fee credit card scams. The Illinois attorney general recently joined the federal crackdown by announcing a preliminary injunction against four Chicago area residents who allegedly bilked tens of thousands of consumers nationwide by offering a guaranteed VISA or MasterCard for advance fees ranging from $97.50 to $147.50. Illinois Attorney General Jim Ryan alleged the Chicago defendants collected the advance credit card fees by debiting consumers' checking accounts and then sending then a Consumer Express catalog charge card. Once consumers purchased $400 worth of merchandise from the catalog they would qualify to receive a credit card application. The Chicago group operated under several business names including Premier Card Services, Prime Credit Services, Tower Financial, Colonial Financial and Consumer Express. The Illinois attorney general said that complaints about credit offers ranked sixth in his state among total consumer complaints filed.

Meanwhile a Toronto-based credit card protection service was cited by the Pennsylvania attorney general for misleading consumers regarding the benefits of its service and for not informing consumers of their right to cancel. The Tracker Corporation offered, for a $189 fee, protection for up to $10,000 in unauthorized credit card charges. The service was marketed under the trade name: Consumer Protection Services. The Pennsylvania attorney general's office also alleged the company did not truthfully identify itself, giving consumers the impression the solicitors were employees of the consumers' credit card company. Under a new Pennsylvania state law consumers have the right to cancel any sale made over the telephone up to three days after the company mails the consumer a required notice of cancellation. Following the attorney general's action Tracker signed an "Assurance of Voluntary Compliance" agreement and agreed to paid restitution and the costs of the investigation.

Despite the complaints over fraudulent offers of credit, actual fraud involving credit card transactions is decreasing thanks to new technologies. VISA reported this month its card fraud rate has dropped to an unprecedented eight basis points of total volume or about $400 million. This means VISA issuers lose about eight cents for every $100 charged to a VISA card. VISA says fraud has been dropping each year since 1993 primarily due to programs aimed at not-received-issued cards, identity fraud and suspicious purchase patterns.

UP ON THE HILL

Congress begins debating the Bankruptcy Reform Act of 1998 this month with credit card companies and consumer groups gearing up for a tough battle. The credit card industry believes too many consumers file Chapter 7 bankruptcies or full liquidation petitions. Last year 1.3 million Americans filed for debt relief through the bankruptcy system with 70% going Chapter 7. To bolster card issuers' stand Ernst & Young released a report showing one fourth of Chapter 7 bankruptcy filers have enough income to repay at least one-third of their debts, while 10% of filers could pay all their debts. The researchers also found that, had the Bankruptcy Reform Act of 1998 been in place in 1993, about 14% of Chapter 7 filers would have been required to file a repayment plan under Chapter 13. The company projects Chapter 7 filers forced into Chapter 13 could repay 63% of their unsecured, non-priority debt. The Ernst & Young analysis is based on a study of 1,273 bankruptcy petitions filed in Boston in 1993.

UP ONE MORE NOTCH

Debit cards with the VISA or MasterCard logo continue their surge this year. The industry projects fully 10% of total 1998 card purchase volume will be via debit cards. To help the debit card push VISA announced this month the VISA Business Check Card for small business. Following extensive tests by seven U.S. issuers, VISA rolled-out its new off-line debit card for business. The new card is targeted at small businesses with less than $10 million in annual sales and up to 100 employees. Cardholders will also be eligible to participate in various VISA Business promotions including a vendor discount program called "Time to Cash In". VISA estimates there are 7.5 million eligible business representing $359 billion in potential charge volume. VISA projects this market segment will expand by one million businesses by the year 2001.

CAR CARD

Banc One rolled out a new credit card this month for auto dealerships and other auto service providers to offer customers special financing for car repairs and accessories. Banc One's CarCareONE card offers instant credit for qualified customers. The new card features a 90-day, same-as-cash program on purchases over $150, a 25-day grace period on purchases under $150 and no annual fee. The card also includes a free emergency roadside assistance program providing free jump starts, towing, tire change, fluid replacement, and lock-out service.